Investor Day is a day of exchange devoted to investors and financial analysts. On this occasion, Edenred's growth opportunities and strategy were presented to 60 participants.
Jacques Stern, the Group's Chairman and CEO, focused on the key parts of its "Invent 2016" strategy and the Group's growth opportunities:
'After laying solid foundations and successfully meeting the targets of the 'Conquer in 2012' strategic phase, we intend to strengthen our strategy for strong and sustainable growth in the context of 'Invent 2016". We are now committed to accelerating our deployment in the expense management market and to increasing our portfolio of services not only for clients, but also for our affiliates and beneficiaries. '
During this day, speakers covered the three parts of "Invent 2016":
- Driving sustained growth on current Employee Benefits markets
- Developing new growth opportunities
- Exploring new growth territories
Driving sustained growth on current Employee Benefits markets
Employee benefits markets, in which Edenred has already operated for 50 years, still offer significant growth potential in countries where the Group is established, stemming from:
- The increase in the potential market, i.e. the number of people working in the formal sector of the economy. This is being driven by the formalization of the economy and the creation of new jobs, particularly in emerging markets.
- The increase in the penetration rate, through the gains of first-time clients who have not yet used these solutions.
- The increase in Edenred's market share, thanks to the development of differentiated solutions.
For instance, in Portugal, the market is growing quickly thanks to a change in legislation which is favorable to development of meal vouchers. To seize this opportunity, Edenred joined forces with Banco Espirito Santo, thereby becoming the local market leader
Developing new growth opportunities
As part of the "Invent 2016" strategic phase, the Group intends pursuing the development of new solutions, particularly in the expense management segment and by opening up to new countries.
Launch of new solutions
Innovation directly contributes to the growth in Edenred's business; the Group has already launched 28 new solutions in 2 years. Among these, the Ticket Plus® Card, in Germany, shows strong potential. This benefit allows companies to distribute funds dedicated to purchase of staple goods (food, fuel).
The Group has already opened up 3 new countries: Finland, Japan and Colombia. The latter two show promising potential due to the significant scale of their market and the low penetration rate. Geographical expansion will be accelerated by 2016 through the opening up of three additional countries. 10 countries are currently under consideration to this end.
Development of the Expense Management Business
A strong potential has been identified on this market, which currently presents a low penetration rate, so as to contribute to medium-term growth. The Group is capitalizing on its expertise in order to develop its activity on this market's three segments:
- Fuel and fleet management: Edenred is keen to capitalize on its internal authorization platforms to launch solutions in existing host countries. In Mexico, for example, Edenred is creating new value-added services, such as vehicle maintenance or roadside assistance via its Ticket Car® solution. This organic expansion will be combined with targeted acquisitions of specialty petrol-card issuers.
- Management of business travel expenses Edenred proposes an end-to-end offer covering all business travel expense needs on the small and medium-sized corporate market. The solutions proposed will be managed by a shared platform for all countries, which will be enriched by new functions each year.
- Sector-specific expenses as illustrated by the acquisition of Repom in December 2012, the specialized leader in the independent "frete" market in Brazil for the past 20 years. Repom prepaid cards cover all of an independent trucker's expenses, including fuel, restaurants and tolls, as well as his payment for goods delivery.
The Group estimates that expense management solutions should account for over 20% of the consolidated issue volume in 2016, compared with 10% currently.
Exploring new growth territories
The shift to digital is opening up a whole new field of opportunities. Digital transactions online or by card enable the collection of data and enrichment of programs with related services. This is enabling the Group to achieve more intense interaction with all stakeholders (clients, affiliates and beneficiaries) and to sharpen its differentiation.
The Group is therefore committed to:
developing online service platforms for client companies in order to enrich its employee benefits programs with additional services. These solutions will enable human resources departments to optimize the management of their benefits policies and to demonstrate the value of these policies to employees. These platforms will be set up in 15 countries by 2016.
enriching the beneficiary experience by leveraging the possibilities offered by mobile devices. To meet this objective, the Group may primarily capitalize on PrePay Solutions, its in-house authorization platform that is widely recognized in the prepaid industry. For example, the platform is in charge of processing transactions via Cash on Tap, the first contactless payment solution from Everything Everywhere, a UK mobile phone operator,
developing solutions for affiliates and beneficiaries, thanks to analysis and use of data originating from transactions. These solutions will be developed in 10 countries by 2016
For example, the NutriSavings program developed in the United States is enabling the Group to acquire expertise in data tracking and analytics. Under the program, grocery purchases by enrolled employees are analyzed and rated according to their nutritional value. Participants receive incentives from their employer or discount eCoupons for healthy food products. This strategy is made possible by the accelerated shift to digital with the aim of switching over 75% of issue volume to digital media by 2016.
These actions have allowed the Group to raise its target for organic growth in issue volume to between +8% and +14% annually.